Transcontinental increases revenues in Q3; net income still in the red

MONTREAL—Transcontinental has reported a modest profit in its third quarter, but its net income is still in the red this fiscal year.

The publicly-traded printing and publishing giant increased its revenues by 8% in Q3 ($517 million compared to $479.4 in Q3 2011), and is up 4% in revenues YTD. The growth in revenue, according to the company, is from acquisitions including Quad/Graphics Canada and Redux Media.

Challenges to revenue included an "expected" reduction of sales in its Educational Book Publishing Group, as well as the drop in national advertising in community newspapers outside Quebec, said the company.

Transcontinental's net income (profits) for the quarter was $9.6 million, compared to $33.2 million in 2011 Q3, but so far this fiscal year, net income is at -$126.3 million. The company had declared a $33.3 million loss in its Q1 statement mainly attributed to a tax provision of $58 million due to notices of re-assessment, which the corporation said at the time it intended to contest. In Q2, Transcontinental reported a loss after recording a $180 million writedown related to its media business.

"The third quarter results demonstrate the resilience of our printing operations and the adverse impact of difficult market conditions on some niches in the media sector," said François Olivier, president and chief executive officer. "In the printing sector, the integration of Quad/Graphics Canada progressed and we are on track to generate the anticipated synergies of more than $40 million over the next 18 months. In fact, starting in the fourth quarter, we will reap the benefits of this acquisition more significantly. We sold our remaining one- and two-colour book printing assets and renewed several contracts with national retailers. We also recently extended contracts to print Rogers' marketing products and magazines."